Once again, I had the chance to attend the press day at Paris motor show to see the latest products and trends. This year the event featured a more modest scenario as many brands decided to skip the show. However, there were big news coming from the French stands but especially from the German premiums. As it has been happening during the last 5 years with other motor shows, the main topic in Paris was the electrification and the confirmation of the SUV boom.
The majority of FCA brands cancelled their participation this year following other key makers like Ford, Nissan, Volvo, Volkswagen and Opel. The main reason is certainly the lack of new products to show, even if the official motivation is another one. Therefore, I am making use of my attendance to the show to understand which makers are the real threats to Fiat, Alfa Romeo, Maserati and even Jeep.
It is not Volkswagen
Considered as a big mainstream car brand in Europe, Fiat is traditionally compared to its European peers, Volkswagen, Renault and Peugeot. They all have in common a big presence in their domestic markets and they target more or less the same kind of consumers.
But things are changing very fast and Fiat as a brand is not as big as it used to be 10 years ago. Its range size has dramatically decreased from 19 different models in 2009 to 11 passenger cars this year. With the discontinuation of the Punto this year (that makes 10 in total), the brand is out of the popular B-Segment in Europe, which counts for one in five of the cars sold in Europe. Fiat also abandoned the D-Segment in 2011 (Croma) and the compact and large MPV segments by axing the Multipla and the Ulysse.
Today, almost half of its registrations in Europe correspond to city-cars, while SUVs, the real driver of growth, counted for 14% of the total through August. Despite its age, the importance of the Fiat 500 is growing every year, and along with the strong presence of the Panda in Italy, Fiat is now more similar to Suzuki than Volkswagen.
The Japanese brand may not be a big player in Europe, but globally speaking is by far the leader in the A-Segment. In H1-18, it sold more than 616.000 city-cars, which counted for almost one fourth of global total. Of course that almost all of those units remained in India and Japan (90%), and Europe counted for only 6% of the total. However, Suzuki should not be underestimated. It controls the first and third largest city-car markets and has a strong presence in India, which is set to become the third largest car market by 2021.
Instead of trying to compete against the Germans and French, Fiat should pay more attention to Suzuki. Currently it offers 11 different city-cars worldwide (including the popular kei-cars in Japan). In Europe, the range is composed by the Celerio and Ignis, two different models that target different consumers. The Celerio is quite popular among the rentals, while the Ignis has gained a reputation among the people looking for a small 4×4 (a direct threat to the Panda).
Registrations figures wouldn’t tell there is a big threat in Europe (Fiat sold more than 5 times more than Suzuki). But Suzuki is also making use of its small expertise to gain traction in the SUV segment with 3 models that play in the lower segments: the Jimny, Vitara and S-Cross. In contrast, Fiat offers the 500X as an alternative to the popular Captur, 2008 and T-Roc, and struggles to find its place there.
Could Volvo threat the biscione?
Alfa Romeo is for FCA as Audi is for VW Group. Others think it is a direct rival of BMW, as it has this sporty positioning and premium at the same time. In any case, Alfa is still far away from its German rivals no matter the big effort made during the last 5 years. The Giulia and Stelvio can finally take away some clients from the Germans, but they arrived late and they are not enough. Despite the strong growth posted by Alfa in H1-18, (+15%), its global sales volume represented 6% of Mercedes and BMW global totals, and 7% of Audi’s.
They may be a good benchmark, but the Germans are not the real threat to the success of Alfa Romeo. Volvo is the big issue here, and for several reasons. First, it is globally known (the global world of premiums is limited to Europe, North America, Japan and China). Second, it is growing very fast thanks to a continuous new products push that has allowed the brand to make use of the SUV boom (they represent half of its global sales). The last reason is related to its big electrification plans.
Infiniti and Jaguar know how hard it is to grab a decent piece of the premium market. They have several models that include not only the usual sedans but also appealing SUVs and beautiful sport cars. Jaguar for example was the first premium brand, excluding Tesla, to bring a standalone fully electric model. Nevertheless, they still struggle to find a place in the premium market. Their combined market share in the premium global market was less than 4% during the first six months.
Jeep against the Great Wall
Paris 2018 was also the occasion to see the GAC Motors cars. It was the only Chinese brand to attend the show, even if they do not sell their products in Europe. Their stand was composed by 5 different SUVs, one MPV, one sedan and one concept, in line with the market trends. GAC, which is by the way the main partner of FCA in China, is one of the 46 Chinese brands offering a SUV. Jeep is a global brand, but many of these Chinese players are already targeting USA and Europe as the next step of their plans.
The issue here is the weird positioning of Jeep. It is neither a premium SUV maker nor a mainstream one. It is somewhere in the middle, making things more complicated for consumers. The Chinese are already taking away market share from the Western brands in China, and this is mostly because they are making better and more appealing SUVs. If they continue to improve, their expertise with big volumes would become a threat to brands like Jeep, which is currently struggling in China.
GAC, Geely and Great Wall would sit one step below Jeep and could become an interesting choice in the rising middle class of several developing markets. Meanwhile the premiums would continue attacking from above, making life more complicated to Jeep. This can be the scenario in the coming years if Jeep doesn’t address this challenge and finds better ways to reposition itself.
Source: FGW database, ANFIA, UNRAE, bestsellingcarsblog, Carsitaly